In the past few weeks two different studies showing the shortcomings of democracy have been getting a modest amount of publicity, but they deserve more.
One reports evidence that voters reward politicians for manipulating the economy so that personal income is maximized in the two quarters before an election.
That short-sightedness isn’t good, but it leaves plenty of room for defenders of democracy to claim it’s unclear that the effect is harmful on balance. The most recent report claims to demonstrate that the outcomes of about 70 percent of recent U.S. Senate races are predicted by a measure of how babyfaced each candidate is. The bad part about this is that this effect is negatively correlated with measures of competence such as intelligence, education, and ability to win military medals.
I guess I should think harder about what I can do to create something like Futarchy.
Book Review: The Emperor of Scent : A Story of Perfume, Obsession, and the Last Mystery of the Senses by Chandler Burr
This is an entertaining and informative story of how a failed class of theories that tried to explain smell as purely shape recognition have been challenged by a theory that involves detecting the vibrational frequencies of bonds.
Burr does a very good job of making some rather technical discussions of chemistry readable and accurate without intimidating amateurs. The story is enjoyable except when reporting the ugly side of academic and corporate politics. The extent to which he claims that researchers who have based careers on the failed approach to smell refuse to think about the vibrational theory seems rather extreme. Yet I can only find one instance in which Burr unfairly criticizes one of those researchers (on page 233, when he says it’s strange not to know what “the same vibration” means, and implies that “same” simply means an identical integer number of nanometers. Yet it would be strange if vibrations had an integer number of an arbitrary unit such as nanometers, and on page 64 Burr implies that vibrating at 2550 nanometers is the same as 2500 nanometers).
One other incidental comment the book makes about the peer review process is worth repeating. One of the reasons that big name research labs continue producing good results is that they have an advantage comparable to insider trading as a result of seeing papers at the peer review stage, while the average lab has to wait longer to get the same ideas.
Bryan Caplan writes about Robin Hanson’s contrarian views on the effectiveness of medicine and parenting.
Caplan’s conclusion about medicine involving a mix of beneficial and harmful practices is probably correct (and probably consistent with Robin’s views), but some of his reasoning is bogus:
Start with medicine. Modern techniques have clearly saved a lot of lives. If memory serves me, survival rates for premature babies have skyrocketed from 10% to 90%.
Part of Robin’s point is that we can’t tell from the improved survival rates that medicine was responsible. It may be that improved maternal nutrition has made babies better able to withstand premature birth. There is no easy way to distinguish the causes, and there’s some reason to think doctors are more effective at biasing consumers to credit them with improving peoples’ health than farmers are.
The evidence that medicine is less effective than most believe has fewer practical implications than a superficial glance suggests. It implies that you shouldn’t choose an expensive health plan over a cheap one, but leaves open the possibility that you should still see your doctor fairly often, and the possibility that you can “buy” health care that will slightly increase your life expectancy by moving from, say, Havana to San Francisco.
The argument (started by Judith Rich Harris) that parenting styles have little effect has a stronger conclusion. Caplan claims:
The same goes for parenting. We all know kids who let their parents plan their lives for them. Maybe it’s 100% genetic, but that’s a stretch. It’s more plausible to acknowledge that these pliable kids exist, but point out that they’re only half the story. We also all know kids who heard their parents’ plans for their future, and did exactly the opposite just to spite them.
I do not know kids who come close to fitting the first pattern after puberty. Essentially all kids need to demonstrate to their peers by about puberty that they are mature enough to be somewhat independent of their parents. And if you think about the sexual selection pressures on children around that age, you should expect that to be just one symptom of the pattern that Harris points out. Their reproductive success is heavily dependent on their ability to compete with and to impress people who are sufficiently close to their age to become a mate or to compete for a mate. That implies that it is important for them to adapt their personalities in ways that respond to evidence about their peers, and to treat parental opinions as much less relevant.
Unlike the arguments about the ineffectiveness of medicine, the evidence against the importance of parenting styles appears to show that all attempts to improve parenting styles (except for those, such as choosing the best school, which influence whom the child can have as peers) have failed to show benefits.
We have a large industry devoted to convincing parents to buy its advice on parenting styles. This creates a nontrivial incentive to provide evidence that some parenting styles work better than others. That includes incentives to distinguish children that will be helped by style X from those who will be helped by the opposite style. And unlike the evidence that some medical practices work, the evidence for the value of advice on parenting styles consistently fails when subjected to close scrutiny.
It is still possible that parenting styles are sometimes helping and sometimes hurting, but theory and the breadth of the evidence suggest betting against that. Eventually, given tools as drastic as manipulating the child’s genes, parents will someday find ways to manipulate their kids minds. But since there’s little reason to think that children are currently suffering from negligent parenting styles, and there are moderately good reasons to guess that youthful rebellion is mainly the result of children pursing their (gene’s?) interests, it’s hard to see why parents should be trying to alter their children’s behavioral strategies rather than ensuring that they have the resources to do what they want. (Unless, of course, parents have good reasons for pursuing different goals than their children. I’m having trouble analyzing that possibility.)
Social Security was created based on the premise that people of certain ages are unable to support themselves due to poor and declining health. Yet Aubrey de Grey has made a fairly strong argument that this bad health can be cured (see Strategies for Engineered Negligible Senescence), so that the elderly will be as healthy as the young.
Since it’s probably inevitable that the government will end up paying for the initial round of anti-aging treatments, why not make government payments for such treatments conditional on the beneficiary leaving the Social Security system? This would probably save the government enough that it would be worthwhile for it to speed the research up by offering a few billion dollars in prizes for people who complete milestones such as extending the lifespans of lab animals.
There’s a good deal of doubt as to how many decades it will take to produce a good enough cure (and some ambiguity as to how good a cure would need to be to qualify). But the a combination of Aubrey de Grey’s arguments and those of Rob Freitas and Eric Drexler suggest that there’s a very good chance that it can be done before Social Security is expected to collapse. And anyone who thinks Congress might turn Social Security into a system that is certain to remain solvent is drastically overestimating the reliability of demographic forecasts and/or the far-sightedness of Congress.
Book Review: Intangibles: Management, Measurement, and Reporting by Baruch Lev
It isn’t easy to make a book about accounting interesting and uplifting, but this book comes fairly close to accomplishing that. It provides a clear understanding of why it matters how well accounting rules treat intangible assets, and gives some good guidelines on how to improve them.
Some of the proposed improvements are fairly easy to evaluate, such as breaking down R&D into subcategories for basic research, improvements to recently released products, etc., but with some of the book’s suggestions (e.g. trademarks) I’m puzzled as to whether there’s little to be gained or whether he has a good idea that he hasn’t adequately explained.
Alas, accounting standards are a public good that few people have an incentive to create. The improvements suggested by the book could generally be adopted without first being approved by a standards committee because they mostly involve adding new information to reports. But the first company to adopt them gains little until investors can compare the information with that from other companies. And accounting standards committees tend to attract people whose main concern is preventing harm rather than creating new value. And that tendency is currently being reinforced by investors who want a scapegoat for their complacency at the peak of the recent stock market bubble.
I’m curious how U.S. politicians are rationalizing their support for tariffs to punish China for keeping the yuan high (i.e. propping up the dollar). There’s an obvious alternative if it’s as clear as most people claim that the yuan is undervalued: have the U.S. government buy as many yuan as it can. That would make it more expensive for China to keep the yuan down at a probable profit to the U.S.
There may be some Chinese rules which pose obstacles to doing this, but I doubt the U.S. politicians are able to know that they couldn’t get around such rules.
Note that I didn’t ask what their real motives are (tariffs benefit special interests more than buying the yuan would, which provides a strong hint). I’m interested in what excuses they would give.
I attended an interesting talk yesterday at SJSU by Dwight R. Lee on the topic “Misers vs. Philanthropists: And the Winner Is?” (part of a provocative lecture series sponsored by the Econ department).
His attempt to prove that misers helped the world more than philanthropists was only a partial success, mainly because he made assumptions about how well philanthropists spent their money that were somewhat arbitrary and unconvincing (probably too favorable to many philanthropists). He did a good job of explaining why philanthropists were overrated and misers underrated. The miser who hides money in his basement provides diffuse benefits to other holders of money by driving up the value of the money, providing nobody with much incentive to understand the effect. The beneficiaries of philanthropists are much more concentrated groups of people, who notice the benefits in ways that public choice theory describes for comparable political handouts.
I’m a bit puzzled as to whether the benefits he attributes to misers are often offset by central bank policies.
The best part of his talk was the great analogy he gave to suggest in a concise way that can be understood by an average person why the fact that workers get laid off isn’t an argument against free markets. He asked whether anyone in the audience liked pain. Nobody raised a hand. He then asked whether anyone would want to be completely without pain. Nobody raised a hand at this point either, correctly anticipating the description he would give of people who never feel pain (a disease known as CIPA, which significantly reduces a person’s life expectancy). Likewise with markets, plant closures are a symptom of mistakes in resource allocation, and we can expect systems that suppress those symptoms to perpetuate mistakes.
Temple Grandin’s latest book Animals in Translation has a couple of ideas that deserve some wider discussion. (The book as a whole is disappointing – see my reviews on Amazon for some of my complaints).
She reports that Con Slobodchikoff has shown that prairie dogs have a language that includes nouns, adjectives, and verbs, and they can apparently combine words to describe objects they haven’t seen before. This seems sufficiently inconsistent with what I’ve read about nonhuman languages (e.g. in Pinker’s books) that it deserves more attention than it has gotten. I can’t find enough about it on the web to decide whether to believe it, and it will take some time for me to get a paper version of Slobodchikoff’s descriptions of the research.
Grandin has an interesting idea about the coevolution of man and dogs. Domestication of animals causes their brains to become smaller, presumably because they come to rely on humans for some functions that they previously needed to handle themselves. It seems that human midbrains shrank about 10% around 10,000 years ago, about when dogs may have become domesticated. That is what we would expect if humans came to rely on dogs for many smelling tasks.
Book Review: FAB: The Coming Revolution on Your Desktop–From Personal Computers to Personal Fabrication by Neil Gershenfeld
This book brings welcome attention to the neglected field of personal, general-purpose manufacturing. He argues that the technology is at roughly the stage that computing was when minicomputers were the leading edge, is good enough to tell us something about how full-fledged assemblers as envisioned by Drexler will be used, and that the main obstacle to people using it to build what they want is ignorance of what can be accomplished.
The book presents interesting examples of people building things that most would assume were beyond their ability. But he does not do a good job of explaining what can and can’t be accomplished. Too much of the book sounds like a fund-raising appeal for a charity, describing a needy person who was helped rather than focusing on the technology or design process. He is rather thoughtless about choosing what technical details to provide, giving examples of assembly language (something widely known, and hard enough to use that most of his target users will be deterred from making designs which need it), but when he describes novel ideas such as “printing” a kit that can be assembled into a house he is too cryptic for me to guess whether that method would improve on standard methods.
I’ve tried thinking of things I might want to build, and I’m usually no closer to guessing whether it’s feasible than before I read the book. For example, it would be nice if I could make a prototype of a seastead several feet in diameter, but none of the examples the book gives appear to involve methods which could make sturdy cylinders or hemispheres that large.
The index leaves much to be desired – minicomputers are indexed under computers, and open source is indexed under software, when I expected to find them under m and o.
And despite the lip service he pays to open source software, the CAM software he wrote comes with a vague license that doesn’t meet the standard definition of open source.
In the latest issue of Econ Journal Watch, Bryan Caplan and Donald Wittman hold an inconclusive debate on whether democracy produces results that are sensibly related to voters’ interests. They come much closer than most such discussions to using the right criteria for answering that question.
But they fail because they implicitly assume that inaccuracies in voters’ beliefs are random mistakes. If that were the case, Wittman’s replies to Caplan would convince me that Caplan’s evidence of voter irrationality is as weak as the arguments that consumer irrationality prevents markets from working, and that Wittman’s proposed experiments might tell us a good deal about how well democracy works.
On the other hand, if you ask whether voters have incentives to hold beliefs that differ from the truth in nonrandom ways, you will see a fairly strong argument that voters’ inadequate incentive to hold accurate beliefs causes systematic problems with democracy.
Imagine that you live near a steel mill. This means that believing that steel import restrictions are bad will increase the risk that your acquaintances will dislike you (because you views endanger their jobs or their friends’ jobs), and will probably bias you toward supporting protectionism.
Or take the issue of how gun control affects crime rates. There are some obvious patterns of beliefs about this which the random-mistake hypothesis fails to predict. Whereas the theory that people adopt beliefs in order to indicate that they think like their friends and neighbors (combined with some regional variations in gun ownership that created some bias before people started thinking about the issue) does a much better job of predicting the observed patterns of belief.
Because this seems to be a widespread problem with democracy, I’m fairly certain democracy works poorly compared to markets and compared to forms of government such as Futarchy which improve the incentives for policies to be based on accurate beliefs.